Demonetization as India's Post-Truth Political Experiment - PJ James

THE economic and social disruptions inflicted by the post-truth project of demonetization have not yet been properly analyzed. BJP’s success in the recent Assembly elections and total disarray among the parliamentary opposition which never raised demonetization as a campaign issue in the elections have yielded another opportunity for Modi with the backing of corporate media to intensively project his post-truth brand as a corruption fighter while unleashing the biggest-ever assault on the Indian people.

India is a cash-centric economy, i.e., a country more reliant on cash than almost any other country on earth. Even Uber in India accepts cash — the only country in the world where this option is available as 85 % of the workers are still paid in cash. Except a small group of corporate giants who hold the biggest chunk of black money in India, the ruling party leaders and a small coterie of insiders tied up with the higher echelons of power to whom prior information on demonetization was leaked out, more than 133 crore of people were in the dark about demonetization, the sudden midnight attack by which hundreds of millions were left without cash, their sole source of power and essential means to engage economically. And it took almost four months since November 8, 2016 for accomplishing the process of re-monetization, i.e., for restoring around two-thirds of the country’s currency value in supply which had been in circulation on the eve of demonetization. And, as the process continued Modi’s rhetoric got its emphasis on transition to financial digitization and transformation of India to a cashless economy, relegating fight against black money and corruption to the background. Meanwhile Modi-fans went to the extent of claiming demonetization as an epoch-making measure in transforming a traditional cash centric economy to a fourth industrial revolution era and claimed: “India will be ‘before demonetization’ and ‘after demonetization,’ BD and AD.”

Is India a Guinea Pig Country?

Today, there are ample documented evidences to prove that the entire demonetization agenda was designed and implemented at the behest of Washington-based USAID in association with such American foundations, NGOs, and agencies as Better Than Cash Alliance, the Gates Foundation (Microsoft), Omidyar Network (eBay), the Dell Foundation, Master-Card-Foundation, Visa, Metlife Foundation, United Nations Capital Development Fund (UNCDP), etc., whose declared goal has been to push back the use of cash in favor of digital payments in India and globally except, of course, in the US. According to “Beyond-Cash” report, presented by USAID, “over 35 key Indian, American and international organizations have partnered with the Ministry of Finance and USAID on this [demonetization] initiative.” In fact Modi has been only a conduit for this imperialist use of India as a “guinea pig country” or “trial country” code-named as “financial-inclusion”-drive. Ironically, in Beyond-Cash report USAID had found that in India 97% of transactions were done in cash and that only 55% of Indians had a bank account. It also found that even of these bank accounts, “only 29% have been used in the last three months.”

Washington’s objectives of this “war on cash” among other things have been many. Of primary importance are the corporate business interests of the US-companies that dominate the global IT business and financial payment systems. By turning off the engines which drove the cash economy, the attempt was to drag people in to digital financing vehicles, like debit cards and e-wallets controlled mainly by US corporations. Equally important has been surveillance power that goes with increased use of digital payment. US-intelligence organizations and IT-companies together can survey all international payments done through banks and can monitor most of the general stream of most valuable digital financial data. But the most important has been connected with the status of the dollar as the world’s currency of reference and the dominance of US companies in international finance that provide US government with tremendous power over all participants in the formal non-cash financial system. In the digitized world, it can make everybody conform to American law rather than to their local or international rules. Less the cash in use, the more extensive and secure is US power, as the use of cash other than dollar is a major avenue for evading this power [http:/norberthaering.de 2017]. Modi’s pioneering effort to incentivize digital payments in India offering strong support to help the people leapfrog cash transactions to digital payment solutions were in conformity with and as part of this broader US imperialist agenda of experimenting India, one of world’s largest cash economies, with digital transactions.

The extent of economic disruption and social havoc created by demonetization remain largely unreported. Corporate media has reported only on the death of around three dozen people standing along the queue before banks and ATMs and has totally ignored the manifold repercussions arising from demonetization. For instance, women, the most oppressed in India, 80 % of whom having no access to banks and whose only lifeline has been cash are the hardest hit. Over the past one decade, due to neoliberal policies, the percentage of women having employment that too mainly in the informal rural sector has dropped from 37% percent to 27%. Women stowing away small amounts of cash for emergencies without husband’s knowing is a ubiquitous phenomenon in patriarchal India. Demonetization was a severe blow to them resulting in their increased dependence on males. This is in addition to the economic slowdown and job losses especially with respect to the shutting down of agriculture, fishing, traditional and informal sectors, breakdown in trade and commerce and all round collapse in consumption. Though post-truth or doctored statistics tried to cover up these facts including reduction in overall investments, both in the formal and informal sectors, has certainly reduced the much trumpeted GDP growth rate. The proposed GST regime which is to begin in the second half of 2017 is going to be another grave disrupter as far as the broad masses of people are concerned.

Initially, demonetization was sold by Modi as a campaign to fight corruption, black money and counterfeiting. This campaign itself belonged to the realm of post-truth since 80 % of the black money is already stashed in foreign tax havens, and 15% in real estate, gold, share markets and other speculative avenues. Only 5 % of the black money is kept in currency form, while counterfeiting is only 0.002% of the total currency in circulation. However, to this day, neither the Modi government, nor the Reserve Bank in their post-demonetization briefing has given any information on the extent of black money captured. And the RBI has gone to the extent of spreading another post-truth that disclosing such information will be detrimental to national security. In the absence of the Central Bank disclosing any data on black money that is wiped out through demonetization, independent sources have estimated that the banned notes that banks received as on December 31, 2016 have exceeded the volume of currency originally ascertained by RBI at the time of demonetization. This implies the success of black money holders in legalizing all their holding thereby undermining Modi’s declared objective of demonetization. The fight against counterfeiting has become more counterproductive. Modi’s own argument was that changing banknotes is an effective means to combat counterfeiting. Modi-bhakts were competing each other in spreading reports that the newly minted 2000 and 500 Indian rupee notes with enhanced security feature will be anywhere from impossible to rather easy to counterfeit. In the post-demonetization context, however, this has become another post-truth as reports on the arrest of people with new 2000 and 500 fake currencies are pouring in from various parts of the country in an unprecedented manner.

The extent of digitization achieved by demonetization is still problematic and confusing. No doubt, various digital payments and e-wallet service provisions floated by corporate giants including Reliance, India’s biggest corporate speculator have come forward with the expectation of reaping profits. During the November-December two-month long demonetization process, almost 300% increase in new e-wallet sign-ups were reported in India. Very interestingly, the digital increase was mostly in small ticket transactions that were cash-driven—even small street vendors have started beginning to accept digital payments, in spite of extremely poor digital financial infrastructure in the country. In the context of the availability of only non-cash options in several cases, people were forced to resort to card terminals like ATMs and PoS (point of sale) machines even in the absence of adequate banking, electricity, telephone, mobile and internet connectivity. Much talk on growth in government’s tax revenue on account of interlinking between digital monetary payments and computerized tax transactions also gathered momentum along with demonetization. For instance, Modi regime’s claimed a 26.6% surge in indirect tax collection backed by added information from 47 cities in India reporting a combined 268% year-on-year increase in tax collection in the last month of 2016 !

Cash Transactions Trumping Digital Payments?

However, latest trends depict a different state of affairs. With the re-monetization process being completed, cash transactions have started picking up and in fact pushing down every form of digital transactions. The reluctance on the part of e-wallet operators and merchants to pay user charges to banks and banks over enthusiasm to impose exorbitant services charges on ‘captive’ customers have led to an abrupt decline in the volume and value of digital payments in India in the post-demonetization situation. People have started hoarding cash on a large scale and this has led to a fall in the availability of cash with banks and in circulation channels.

According to informed sources contrary to the initial euphoria, what occurs is a slump in the demand for new point of sale (PoS) devices throughout the country. In the context of superimposed of cash-restrictions, digital payments and services that shot up by around 20 times by the end of December 2016 have started declining since January 2017. For instance, according to an analysis by Forbes, the value of Unified Payment Interface (UPI) transactions that recorded 677.8% in December2016 compared with the previous month, it declined to 137.1% in January 2017, 14.5% in February and finally reversing the whole trend in April by depicting -7.9%. More or less the same trend is visible in all other digital financial services including Immediate Payment Services (IMPS), Cards, Pre-paid Payment Instruments, and Mobile Banking, the latter representing a minus or negative growth of 32.6% in April. Thus people’s attraction to cash is very intense that cannot be defeated by any amount of propaganda for digitization.

Demonetization a Concrete Case of Post-Truth Politics

Post-truth politics or post-factual politics is a political culture in which truth or facts have only secondary importance or are less influential in framing debate and shaping public opinion. It is a situation in which rather than objective facts and stark realities of life, appeals to emotions and personal beliefs assume the basis of even policy-making. Modi’s government is a typical instance of the post-truth politics in actual practice. Its key policy assertions are divorced from the daily living needs and sustenance of the vast majority of Indians. Nowhere is this more evident than with Modi’s demonetization drive, which plunged the country and its people into an unprecedented crisis.

Even while demonetization as a pro-corporate offensive has hit the vast majority of people hardest, with the connivance of corporate media and with immense administrative and political power at its command, Modi government has effectively succeeded in conveying the message that it is acting against black money holders and corruption. As the parliamentary opposition has become incapable to offer a different narrative and since a genuine political alternative is yet to assert, Modi & Co. has succeeded to keep the masses in the illusion that the government was decisively fighting corruption on behalf of people. And this illusion has refrained them from judging the pro-corporate Modi regime on the basis of concrete facts.

As such, such issues as the amount of black money confiscated, the volume of cash returned to banks, the amount of new currency printed and circulated, and similar other data pertaining to the impact of demonetization on GDP growth, employment, industrial and agricultural output, etc. lost their importance and fall outside the narrative. India’s demonetization fiasco thus perfectly qualifies as a post truth experiment in which, even if temporarily, narrative has become victorious over concrete reality.

Probably, this may be the reason why spontaneous people’s outbursts against demonetization have not emerged in the country. Though there have been protests, demonstrations, and occasional bouts of panic in certain places , vast majority of the 133 crore Indians who were forced to stand in queue for hours on a daily basis disrupting their lives seem to have adjusted to the painful transition in a dutiful manner for the betterment of the country.

If this fascistic measure had been in some other context and in some other country (for instance, the Venezuelan government which resorted to demonetize just 40% — as against 86.4 % in India — of the currency value in circulation more or less during the same period was forced to reverse that decision following the outbreak of people’s riots) large scale violence and upsurges would have been the outcome. In fact, this absence of nation-wide upsurges also was appropriately incorporated in to the post truth narrative and interpreted by the ruling coterie as strong undercurrent of people’s support to Modi.